Understanding Tax Deductions
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Tax Credits vs. Tax Deductions
Tax credits and tax deductions may be the most satisfying part of preparing your tax return. Both can reduce your tax bill, but they work in very different ways.
Tax Credits
A tax credit directly reduces the amount of tax you owe. It provides a dollar-for-dollar reduction in your tax bill. For example: A $1,000 tax credit lowers your tax bill by exactly $1,000 (For a full explanation of tax credits, see the factsheet: Tax credit: What it is, how it works, who qualifies).
Tax Deductions
A tax deduction reduces the amount of your income that is taxable. The value of a deduction depends on your tax bracket. For example, if you are in the 22% tax bracket, a $1,000 deduction saves you $220 in taxes. This is because 22% of $1,000 = $220 (that is, $1,000 × 0.22 = $220).
Key Difference
Both tax credits and tax deductions help lower your taxes, but they work differently: Credits reduce the amount you owe directly; deductions reduce the amount of income that gets taxed.
Because of this, a credit often has a larger impact than a deduction of the same amount. However, understanding how tax deductions work is essential because deductions help determine your taxable income — the starting point for calculating how much tax you owe.
The Standard Deduction
The standard deduction is a set amount (determined by law) that you can subtract from your income to reduce how much of your income is taxed. You do not need receipts or documentation; everyone qualifies for the standard deduction unless they choose to itemize instead. The amount of the standard deduction depends on your fling status, and the IRS adjusts these amounts each year for inflation. Table 1 is the standard deduction amounts for 2026.
| Filing status | Standard deduction (2026) |
|---|---|
| Single | $16,100 |
| Married fling separately | $16,100 |
| Head of household | $24,150 |
| Married fling jointly | $32,200 |
| Married fling jointly | $32,200 |
For example, if you are single, your standard deduction in 2026 is $16,100 — meaning the first $16,100 of your income is not taxed. Most taxpayers take the standard deduction because it is simple, automatic and often larger than the amount they could claim through itemized deductions.
If you are 65 or older and/or blind, you can claim an additional amount on top of the standard deduction. For example, in 2026, the standard deduction for a single flier is $16,100. If you are single and age 65 or older, you can add an extra $2,050, giving you a total standard deduction of $18,150. Table 2 shows the additional standard deductions available to individuals who are age 65 or older and/or blind.
| Filing status | Filing status | If 65+ and blind |
|---|---|---|
| Single or head of household | $2,050 | $4,100 |
| Married fling jointly or separately | $1,650 | $3,300 |
People with the same annual income can end up with very different taxable incomes depending on their fling status, age, and whether they qualify for additional deductions such as the blindness deduction. In Table 3 below, both the single flier and the married couple start with the same $40,000 income, but the married couple receives a much larger standard deduction. This reduces their taxable income to a much lower amount than that of a single flier, meaning the single flier ultimately pays more in taxes. Likewise, single taxpayers who are age 65 or older — or age 65 and blind — receive extra deduction amounts that further reduce their taxable income.
| Scenario & filing status | Age | Blind | Standard deduction (2026 | Taxable income |
|---|---|---|---|---|
| 1. Single adult (single) | Under 65 | No | $16,100 | $23,900 |
| 2. Married fling jointly | Both under 65 | No | $32,200 | $7,800 |
| 3. Single, age 65+ (single) | 65+ | No | $16,100 + $2,050 = $18,150 | $21,850 |
| 4. Single, age 65+ and blind (single) | 65+ | Yes | $16,100 + $2,050 + $2,050 = $20,200 | $19,800 |
Note: Annual income (all scenarios): $40,000
Itemizing
Itemizing allows you to claim specific deductions — such as mortgage interest, medical expenses, or charitable donations. When your itemized deductions are higher than the standard deduction, you can lower your taxable income even further and reduce the amount of tax you owe. Taking the standard deduction or itemizing is an either/or choice. You can do one or the other, but not both.
Just as with tax credits, taking certain deductions requires meeting specific IRS qualifications based on your fling status, life circumstances, and income. To learn more about the standard deduction and itemized deductions, visit the IRS website.
If you need help, the IRS provides reliable resources through programs like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE), which offer free help to those who qualify. To find a location near you, visit IRS Free Tax Prep Help or contact your local OSU Extension office to see if they offer VITA services in your area.